RE: one form of money managment?28 Jan 2022 10:20
obviously its a bit off topic, but just to pass the time.
An observation I have made is the separation of the SP from the company.
When I day traded it was in just one product (30yr T Bill). In and out several times a day, day in day out. Very quickly I found that the broad macro background had no effect on the minute to minute movements and very quickly the product itself was irrelevant, so it was just numbers.
This led me to divorce my decisions from the actual product and just focus on the actual price action at any given time.
Now I know that different to stocks and longer time frames may undercut some of the above, but what I have seen is that once you look at the company and research it you focus on that itself, the company, (perfectly reasonable).
The problem is I think, then that somehow the individual thinks that they know more than the market does about said company. (which is crazy.)
None of us know remotely what's going on day to day and what progress or not is being made, and what important info is available will go to house brokers and large shareholders. Call it insider trading or what you like but to think that PI research is going to be ahead of the game is (imo) fanciful. Even if it were the case, it would be a very rare event(again, imo).
This then leads to the next problem: Emotional attachment.
Research has led the PI to believe they are on to a winner, there has been much work and research and some "clever" dot-joining to come to that decision. The last thing you want is for the SP to go down and prove you wrong! (so you hang on waiting for the market its mistake and for it to bounce back.)
And the longer you hold a stock the more attached you get to it. (its a bit like doing the same 6 numbers in the lottery. Do it for 5 years and you won't stop now because you just know next week they will come up!)
So i have posted on other BB's that I don't care about the company just the SP. (This can lead to much furore but using Avacta as an example).
Its doing the most fantastic work on improving cancer therapy outcomes. and if successful will transform and save the lives of tens of thousands. But I am not buying into AVCT really, I am just buying effectively a betting slip from a third party who bough it off someone else and i am only buying this much tarnished betting slip in the expectation I can cash it in for a profit.
So, I find it helpful (essential actually), to divorce the SP from the company as the two are not closely related anyway and it helps reduce or remove any emotional attachment to my actions.
Anyway just my musings, please ignore at will.